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The USA Morality play

By: davidpetraitis Friday November 30, 2012 9:14 am

A good friend of mine recently became Swiss. He is looking to let go of his American passport to escape the madness of the American Empire as much as possible on this planet. He asked me in a recent email:

The USA has become a very weird place in many ways – or maybe I have over the now 25 years I have been away. You were also away for a long time, what is your perspective on the country?

I answered him in a longish email:

A stylized US flag

USA: Land of Opportunity for the 1%

On the USA, my perspective is that there is a certain branch of the wealthy oligarchy is controlling the discourse and the large companies. Its control is by buying the hearts and minds of the people who are business oriented to buy into a mental set, a zeitgeist which is tinged with a particular morality. The mental set of leaders of this sect have perpetuated the idea that people who work in monopolistic positions in say finance or media (Murdock and his ilk) or any of the big corporations (GE) are virtuous. The workers, whether here or in low wage countries are of a different sort of people and deserve to be, or at least as a practical matter can be, treated with contempt. There is a leitmotif going on of stories of the immoral poor who feed at the trough of government largesse and are undeserving. One commentator has called the whole narrative the “Stern Father” narrative.

The middle class has been (and is in the process of being) made into the masses, without rights, without decent access to education unless they get loans from the finance elite (and become life long debt slaves), without access to healthcare, without access jobs, to housing sometimes now. The American middle class as a motor of the economy is being hollowed out. Note that 70% of GDP is historically domestic consumption. When the 99% no longer can consume at a growing pace due to the boom bust cycle then the economy of the 1% falters as well. And the difference between rich and poor is getting starker by the year.

The drive of the rich to keep their entitlements and to rob the rest of any entitlements that they may have takes on the weirdness we see in the media. The morality plays of anti-gay, anti-women, anti-ethnic minorities,anti-labor narratives are in fact obfuscations, the equivalent of a very smart marketing of a certain part of the elite media to get people who are in the middle class to vote for candidates who will fleece them by cutting their social security, Medicare and public education.


Worlds first 3D printed gun

By: davidpetraitis Thursday July 26, 2012 7:38 pm
This is indeed terrifying… 3D printed guns. as the article says: this was predicted months ago in a TED talk on Radical Openness by Mark Goodman.Our own creativity has frightening potential for bad, and awesome potential for good. Make your choices wisely today.

The world’s first 3D-printed gun is a terrifying thing | KurzweilAI
World’s first (partially) 3D-printed gun

Debt and Civilization

By: davidpetraitis Tuesday April 17, 2012 6:32 am

A Bust From Ancient Sumeria. Photo by Rob Koopman.

It’s amazing how long debt has been a feature of both civilization and wars. Michael Hudson has done a lot of digging (almost literally) into ancient Sumerian and Babylonian records and recently was interviewed. His recent interview is at Renegade Economists radio show, transcript at his site. In this interview he notes that debt was…

… first documented clearly in around 2400BC when the Sumerian city of Lagash went to war with Umma and it is said that Umma had to pay reparations at the going interest rate, which was one shekel per mina per month, which works out at 20% per year. The calculation ran into the millions of bushels of grain that Umma owed, and so Sumer erected a stone on the boundary between Lagash and Umma saying “You owe us this much money, and if you do not pay it we are going to go to war.” So the first compound interest on record was money owed by a city as war reparations to the victor.

The features of debt and war reparations rings a bell with many fans of  20th century history, where the debt burden caused by First World War reparations were instrumental in the rise of Nazism. Hudson notes also that:

…no economy in history has ever grown as fast as its debts have grown. And that is why business cycles slow down – as debts grow faster than outputs, more and more money is diverted away from spending on goods and services, there is less direct investment, less new hiring and increased vacancies, and people have to pay more to the financial sector and that turns out to be a means of stifling growth.

The financialization of the economy, where finance capital captures rents from debt as an increasing share of productive capcity (usually measured by GDP), crowds out the productive uses of debt and leads to increased inequality and the pauperization of the people.

When foreclosure and the morality of “all debts must be paid” is enforced by the society, or in our case the world political economy, then we have the debt downward spiral. The need to service debt payments leads to austerity, austerity leads to lower output, lower output leads to lower tax revenues to pay down debt and the debt crisis deepens, the deepening debt crisis leads to new calls by the creditor class to more austerity, seizures of real assets such as the national or personal treasures, foreclosure.

Depression and Inflation possible?

By: davidpetraitis Saturday November 26, 2011 7:42 pm

There is something about the impending crisis which I have been having a hard time thinking through… and I may not be alone. So I just want to put it down here. Let us just for the sake of backdrop take the following actions by respective economic powers as possible and look at what they mean.

  1. The current situation in Europe points to a potential freeze up of liquidity in  the next few weeks, maybe days.
  2. This will lead to at least one and probably several European banks to fail.
  3. This will lead to a credit freeze up for sovereigns, banks and main street companies and citizens of Europe.
  4. This will lead to markets to fall in Europe and contagion will spread through the banking system via liquidity and collateral calls and through the normal economies through the lowering of access to credit for consumption.
  5. This will lead to Recession 2.0 or Depression 2.0
  6. At this point the USA has been printing money for several years and will go into overdrive on printing money if the economy dips further downward.
  7. Some people want the ECB to do the same, some think that China credit policy has similarly been too loose.
  8. This will lead (at some point) to higher inflation, maybe hyperinflation.
  9. We may have inflation and depression at the same time which is the Stagflation of the 70′s on steroids.
  10. This may (or may not) be a global pattern of inflation and depression at the same time.

Now I don’t know what the map is for that scenario. This is beyond the experience of any economy in the past. We’ve seen hyperinflation in single economies: Germany, Argentina, Zimbabwe, some of the Eastern European countries. We’ve had depression and have Keynesian economics with its prescriptions of deficit spending to get out of that sort of crisis. But what if we have deflation, depression and deficit spending all at the same time? What happens then?

Mostly the recipe for getting stability back in serious single country situations is repudiation of sovereign debt (i.e. default), revaluation of the currency (i.e. a new currency), recapitalising the banks in the new currency, forcing the citizens to use the new currency (i.e. repudiating private debts in old currency or restating them at a penalty rate in the new currency) and starting from zero again.

How would that work in Europe, the USA and China in roughly a 5 year time frame? We see already that serious financial problems cause unrest in the streets. In fact it is well known that they are precursors of social revolutions or seizures of power by some cabal. Will we see the unrest of Greece spreading, even as we see the Occupy movement spreading. Is there violent revolutionary or reactionary action possible in some countries which we normally see as democratic. In current discussions of Greece there is a recurrent recital of the time of the time of the military Junta. and Argentina had its military react to the Socialist  moves of Allende.

If unrest spread globally, would some global political/ financial order come into place then? I am sure some would try to make that happen. What would be the precursors, the signs that we should look for then? The calling for a new Bretton Woods by China and Brazil? That has already started.

Cross posted from

How Banksters use Universities for rent extraction: HuffPost

By: davidpetraitis Friday October 14, 2011 8:25 am

wrote previously that Universites were becoming part of Finance Capital’s move into all the areas of what used to be public goods owned by the people. They have become merely conduits for recruitment of suckers for a financial rent taking.

Now the Huffington Post has a new article showing exactly how this was done. Goldman Sacks was part of a buyout of for-profit University company EDMC. The elements of a familiar bankster led rent extraction scheme are all here: Goldman Sacks, Congress, soaking the poorest and vulnerable for rents. When will the people say enough?

“When Goldman shows up at the party, they show up as the smartest guys in the room,” said Barmak Nassirian, who followed EDMC’s rise over the past decade as the associate executive director of the American Association of Collegiate Registrars and Admissions Officers. “2006 was the significant year, because that was the year that the smartest people figured out how easy it was going to be to grow geometrically. You’d have to be from Mars not to know that they were smelling an easy path to big bucks.”

And the tactics were taken right out a some subprime slime selling manual:

After the deal closed and Goldman became a partner, employees soon noticed a drastic shift in culture. Longtime admissions managers were replaced, ushering in an era in which recruiters were endlessly hounded by supervisors about hitting weekly enrollment targets. The admissions staff nearly tripled, requiring expanded floor space to accommodate a sales force of more than 2,600 across the country.

Management handed down revamped telemarketing scripts designed to prey on poor and uneducated consumers, honing in on their past mistakes in life as a ploy to convince them that college would solve all their problems, according to conversations with more than a dozen current and former Education Management Corp. employees over the past two months.

“You’d probe to find a weakness,” said Brian Klein, a former admissions employee who worked for three years at Argosy University Online, one of four major colleges operated by EDMC. “You basically take all that failure and all those bad decisions, and you spin it around and put it right back in their face as guilt, to go to this shitty university and run up all of this debt.”

Recruiters told people with felony criminal records that pursuing a criminal justice degree would allow them to achieve their dreams of joining the FBI — an impossible scenario, because the bureau is barred from hiring people who have been convicted of such offenses. They convinced students with no access to a computer or Internet that they could use the local library for classes, even though they would need to save files and download specific software to access coursework.

“It just got to the point where I felt like I was lying to these people on a regular basis,” said Patrick Flynn, a recruiter at EDMC’s South University online from 2006 through 2009, when he quit. “Honestly, I just felt dirty doing the things I was doing. It’s almost like they were trying to make me take advantage of people’s belief in what this education was going to get them, when I didn’t buy into it myself.”

Notice also that Congress was complicit in the creation of this rent extraction on the back of the people as well.

For the new investors, 2006 opened a particularly attractive opportunity to invest in higher education. After years of lobbying by the for-profit college industry, John Boehner, then the chairman of the House education committee, helped to eliminate a key provision that had moderated the growth of exclusively online universities.

The so-called 50 percent rule, which required half of all students to be at a ground campus in order for a school to be eligible for federal aid, had been put in place to discourage dubious distance education programs that offered subpar learning. Boehner helped to nix the rule in a budget agreement that took effect in early 2006, allowing schools to expand enrollments — and revenues — without having to invest in additional ground campuses. A spokesman for Boehner did not respond to requests for comment.


Universities, Democracy and Bankers

By: davidpetraitis Monday October 10, 2011 5:08 pm

Someone posted to a Facebook friend a lament on the decline of Universities in the US. To which I responded. I edit the response here.

Actually you have to look through your simple conception of the University, it’s place in education, and the needs of the elites as they have grown to power in the US. Universities were once part and parcel of the elite power structure, in some countries that is still the case. Entrance to the lower classes was restricted. By contrast, Universities in the USA, especially PUBLIC universities were part of the American democratic experiment. They were intended to raise CITIZENS up to a level of the elites in older, more class rigid systems.

In the US in the last 40 years Universities have become For-Profit businesses. This was part of the beginning of the neo-liberal conception that profit and business were proper frameworks for judgements for every quarter of life, even education.

Sometime in the 70′s a “financial innovation” happened: someone realized that the financial returns on a large number of students’ loans could be monetized. Then the LOANS became important and the students’ education less so. Nowadays it is not uncommon to find University entrance people engaged in selling the loan, as much as the university, which is packaged into an Structured Investment Vehicles (SIV) much as mortgages were. Mortgages and Student Loans are part of the same banker led financial debacle we are currently experiencing.  In 1978 a law was passed that was very favorable to the banking interests: student loans were no longer dischargeable in bankruptcy (except under extreme conditions). All of a sudden Student loans could be (and were) packaged into  SIVs and sold as securities since they were backed by Federal Student Loan Administration and law which held that they could not be discharged in bankruptcy.

The bankers made this into a Ponzi-Casino as well. The people who needed the loans are on the hook for life. And in the current banker caused downturn cannot pay their debt, nor expunge it in bankruptcy.

The elites are now chasing rents in this country as they did in 18th century Europe. Structured student loans with a non-default provision guaranteed by law are a good way to extract rent out of  students.

The democratic experiment is perilously close to failure in the USA. Which leads to the provocative question: Is democracy possible without the USA?

cross posted

Japanese reports of Plutonium in soil: “people should not be concerned”

By: davidpetraitis Tuesday October 4, 2011 4:57 am
"Organic Plutonium - Fat Free, Wheat Free, Dairy Free" by Marshal Astor on flickr

"Organic Plutonium - Fat Free, Wheat Free, Dairy Free" by Marshal Astor on flickr

The Japan Times online had a nice way of putting it in their Report of long-range plutonium find tardy. The speed of updating the Japanese public on the potential health hazards has struck me previously in my blog. I found this amazing in this latest post:

“Plutonium won’t do harm unless it gets into people’s bodies. And from the amount detected, (that) possibility is very low. People shouldn’t be concerned about it,” said Furukawa.

Plutonium-239 has a half-life of 24,000 years and plutonium-238 about 88 years. Plutonium-240 has a half-life of about 6,600 years.

Unlike cesium, which emits gamma rays, plutonium emits alpha rays, which can be stopped by skin or clothing but pose a greater risk to cellular material within the body.

Hmmm, the probability that something that will last hundreds or thousand of years will make it into the food chain, or be aerosolized is very low. In my experience – in the reinsurance industry – low probability events over long time horizons have a HIGH probability of happening. I can say with a high degree of certainty, it will happen, it will have health consequences for Japanese and potentially other populations and the government in this situation is playing down the long term health consequences for political and economic reasons.

The government may also want to look at the CURRENT health problems arising. The IBN online reports:

Hormonal and other irregularities were detected in the thyroid glands of 10 out of 130 children evacuated from Fukushima Prefecture, a Japanese NGO said today.

So the health problems are already presenting themselves and the Japanese government spokespeople persist with saying “people should not be concerned with it.”

Chinese Capitalism: The new world standard

By: davidpetraitis Tuesday September 27, 2011 6:07 am

The Chinese model of capitalism is becoming the new (lower) world standard. Anti-worker and anti-regulation activism on the part of even “new” capitalists, will lead to abuse with impunity on the part of American employers. The stories of exploitation of workers’ fragile job prospects, and the spectre of unemployment are many. In New York from various people I hear of hiring for part-time only so benefits do not need to be paid, six or seven day work weeks, ten-hour days. These are the new normal of American capital, and as far as I can see the tendency is for capitalists now to look back to the 1890′s to 1920′s with nostalgia. Unfortunately what goes along with that early stage of capitalism is more income inequality, severe recessions more often; and probably this time around the Second Great Depression in America and Europe.

There has never been a greater threat to the position, direction and prospects of the United States of America than the elites of modern finance capital chipping away at workers’ rights, citizens’ civil liberties and even the Bill of Rights. The manipulation of grass roots organizations by the media controlled by the elites and spouting their ideological positions make the middle class and lower middle class complicit in their own destruction by building a false consciousness around so-called cultural issues of race, religion and anti-government cant.

The utilization of the means of police power, against the young, unemployed, citizens and workers is the obverse of the underutilization of the means of prosecutorial power against the banksters, white collar crime in high places (though the small fry will be sacrificially fried to shield the bosses), corruption, polluters. The state power is a power employed more and more in one direction: favoring the capital owners over and above the citizens and workers. In the 1930′s this was a sign of a fascist state. One hears from the right regular epithets of “Socialist” leveled at President Obama, and I have had it leveled at me for my view – though in my case it is not considered an epithet. Soon I predict you will hear “Fascist” as a response to this level of discourse.

The question for people to decide on is do they wish to support a state that is employed against the citizens worker and immigrants in favor of the owners or can we conceive of a new American nation dedicated to the proposition that all are created equal and none are above the law.

Keep the faith